Correlation Between News Corp and State Street
Can any of the company-specific risk be diversified away by investing in both News Corp and State Street at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining News Corp and State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between News Corp A and State Street Corp, you can compare the effects of market volatilities on News Corp and State Street and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in News Corp with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of News Corp and State Street.
Diversification Opportunities for News Corp and State Street
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between News and State is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding News Corp A and State Street Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Corp and News Corp is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on News Corp A are associated (or correlated) with State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Corp has no effect on the direction of News Corp i.e., News Corp and State Street go up and down completely randomly.
Pair Corralation between News Corp and State Street
Given the investment horizon of 90 days News Corp A is expected to under-perform the State Street. But the stock apears to be less risky and, when comparing its historical volatility, News Corp A is 1.24 times less risky than State Street. The stock trades about -0.25 of its potential returns per unit of risk. The State Street Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 7,497 in State Street Corp on January 25, 2024 and sell it today you would lose (74.00) from holding State Street Corp or give up 0.99% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
News Corp A vs. State Street Corp
Performance |
Timeline |
News Corp A |
State Street Corp |
News Corp and State Street Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with News Corp and State Street
The main advantage of trading using opposite News Corp and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News Corp position performs unexpectedly, State Street can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in State Street will offset losses from the drop in State Street's long position.News Corp vs. Marcus | News Corp vs. Liberty Media | News Corp vs. Warner Music Group | News Corp vs. Fox Corp Class |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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